The Hong Kong unit of the biggest lender on the mainland, Industrial and Commercial Bank of China, expects total yuan deposits held with banks in the city to reach 1 trillion yuan (HK$1.3 trillion) this year. The growth would be driven by the increasing settlement of trade bills in yuan and speculation on the appreciation of the currency, said Timothy Zong Jianxin, ICBC (Asia) director and deputy chief executive. Yuan deposits in the city edged down in June to 698 billion yuan after rising for eight consecutive months. The market estimated the value of the deposits would grow to about 800 billion yuan by the end of the year, but Zong is more optimistic. "Hong Kong remains the most important offshore centre for yuan business," Zong said. "Its first-mover advantage and sustainable innovation will see it take the lead in the development of offshore yuan business." Despite the slowdown in exports on the mainland, more than 70 per cent of the firms using yuan said they expected to use more in the coming five years, according to a survey conducted by HSBC in the second quarter of this year. ICBC (Asia) was assigned by its parent as the offshore yuan trading centre for the group last year. ICBC's offshore arms and branches on the mainland use the Hong Kong subsidiary for price quoting and trading in its offshore yuan business. The local unit would support the group's role in Singapore as a yuan clearing bank - a duty assigned to it by the People's Bank of China (PBOC) in February, Zong said. The bank's offshore yuan trading volume increased threefold to 170 billion yuan in the first half from last year, said Zong. Daily trading volume was 6 billion yuan, and he expected this to accelerate further to 10 billion yuan. ICBC (Asia) was ranked among the top three by market share of the volume of offshore yuan spot trading in the city, he added. Its treasury dealing room housed about 100 staff. Revenue from offshore yuan activities rose to just below half of all trading revenue for the bank, said Lisa Xu Rong, co-head of the global markets and trading department. The PBOC further relaxed offshore yuan loans in July by extending cross-border loans in the currency to the whole country and removing the cap on such loans. The relaxation would probably speed up internationalisation of the yuan, Zong said, and help boost the lender's trading revenues. Zong said the bank was in discussions with companies looking for loans to finance operations in Qianhai in Shenzhen after the auction of two commercial sites in the special economic zone was completed.